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Hit by new US sanctions, Russia halts dollar and euro trade on Moscow Exchange

The exchange and the central bank rushed out statements on Wednesday - a public holiday in Russia - within an hour of Washington announcing a new round of sanctions aimed at cutting the flow of money and goods to sustain Russia's war in Ukraine.
Last Updated : 12 June 2024, 16:56 IST

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New US sanctions against Russia have forced an immediate suspension of trading in dollars and euros on its leading financial marketplace, the Moscow Exchange .

The exchange and the central bank rushed out statements on Wednesday - a public holiday in Russia - within an hour of Washington announcing a new round of sanctions aimed at cutting the flow of money and goods to sustain Russia's war in Ukraine.

"Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in US dollars and euros are suspended," the central bank said.

It added that it would use data from over-the-counter trading - where deals are conducted directly between two parties instead of via a central exchange - to set official exchange rates for the dollar and euro.

The central bank reassured people that their dollar and euro bank deposits were secure.

"Companies and individuals can continue to buy and sell US dollars and euros through Russian banks. All funds in US dollars and euros in the accounts and deposits of citizens and companies remain safe," it said.

The Moscow Exchange (MOEX) said share trading and money market trades settled in dollars and euros would cease. Russia's National Clearing Centre (NCC), MOEX's clearing agent, was also sanctioned.

The US Treasury said it was "targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment into its defence industry and acquisition of goods needed to further its aggression against Ukraine".

Russia's central bank has been bracing for such sanctions for around two years. In July 2022, the bank said it was modelling various sanctions scenarios with forex market participants and infrastructure organisations.

Forbes Russia had reported that the bank was discussing a mechanism for managing the rouble-dollar exchange rate should exchange trading be halted in the event of sanctions against the MOEX and the NCC.

The immediate impact of the US move was not clear, with Russian financial markets closed for the Russia Day holiday.

"This is bad, but expected news," Russian broker T-Investments said on Telegram.

The rouble closed at 89.10 to the dollar on Tuesday and at 95.62 against the euro.

Russia's second-largest bourse, SPB Exchange, came under US sanctions in late 2023. Those sanctions forced the exchange, which specialises in trading foreign shares, to halt trading temporarily and switch to settlements in roubles.

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Published 12 June 2024, 16:56 IST

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